Trust Your Advisor

Zig Zag and Cycles

The chart below is a weekly chart of the S&P 500 Index ETF, “SPY.” Since last October the market has been in a zig-zag pattern indicated by the black line over the weekly price bars. From Investopedia: “The Zig Zag indicator does not predict future trends; it helps to identify potential support and resistance zones between plotted swing highs and swing lows”. Unfortunately, the “SPY” has made lower swing lows since October. For the last 3-weeks the S&P 500 has been trending up, and the market has continued to rise since the FOMC meeting on July 27th. For the market to continue to show any meaningful strength it must break through the resistance line indicated on the chart. If it can break higher it would be reassuring if volume increased too.

July 11, 2022 The Chart above is the S&P 500 exchange-traded fund, “SPY” year-to-date. It is easy to see the downtrend the market has been in for the last 6 months. I have marked the four FOMC meetings that the Fed had this year. The next meeting announcement will be on July 27. The sentiment is for another rate hike of at least 1/2%. On Wednesday, July 13 the Bureau of Labor Statistics will be releasing the CPI report which measures the change in the prices of goods and services purchased...